EPJ: Goldman Sachs says lock in interest rates now

2

December 13, 2012 by tjefferson2076

I highly suggest you check this article out from the EconomicPolicyJournal.com.  Common sense says that interest rates have nowhere to go but up.  The bottom line is lock in interest rates now because 2 factors are going to put pressure on interest rates:

1.  Real growth – if the economy does turn around, the demand for money will increase, and the velocity will increase.  Once the velocity increases, the fed will have to raise interest rates to keep the excess reserves from flooding the market.

2.  Market forces – eventually investors and other countries will stop wanting to hold US dollars.  To get them to hold dollars, the US government will need to pay higher interest rates.

Here is the article:

http://www.economicpolicyjournal.com/2012/12/blankfein-borrow-as-much-as-you-can-at.html

Key quote:
“Blankfein said that Goldman is advising all its corporate clients to borrow “as much as they’re going to need for as long as they think they could need it” because of the low interest rate environment”

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2 thoughts on “EPJ: Goldman Sachs says lock in interest rates now

  1. ethanallen2076 says:

    I have significant difficulty believing Goldman. I also would be very worried with a comment from that institution such as:

    “Blankfein said that Goldman is advising all its corporate clients to borrow “as much as they’re going to need for as long as they think they could need it” because of the low interest rate environment”

    …to me, this seems like the final play. I am no economist, but tend to think completely oppositely. Prepare yourselves for unstoppable inflation. Interest rates may rise, but inflation will rise higher. Just my gut feeling. Lately…it’s been more right than wrong.

    • ethanallen2076 says:

      To me, this comment…

      “Blankfein said that Goldman is advising all its corporate clients to borrow “as much as they’re going to need for as long as they think they could need it” because of the low interest rate environment”

      …is simply the arm of the FED putting more and more cheese on the mouse trap about to break our necks. I think I’ll turn my nose…and head in the opposite direction. Double time.

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